(Informal 1-2 line summaries, which certainly should not be relied upon for legal or other research purposes)
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- In this precedential decision, CAFC clarifies "effective" prejudicial dismissal in relation to jurisdiction to hear the appeal. Here, there were DTSA and patent claims, but the latter were dismissed after trial "without prejudice", which, normally, would deprive CAFC of jurisdiction. Yet, as the CAFC majority observes: "Whether a dismissal is
with prejudice “is functional, rather than semantic." Basically, because the SOL had run on the patent claims, CAFC considers the dismissal as effectively being with prejudice. Consequently, CAFC hears, and rules on, the DTSA claims:
"We agree with EOFlow.
Insulet is barred from “refiling of the same claim” of patent
infringement because the statute of limitations expired in
June 2024 with respect to acts of infringement in June
2018, and the dismissals occurred on January 3, 2025,
more than six years later. "
Notably, CAFC maintains this position, even though the plaintiff posits additional, but not yet filed upon, alleged acts of infringement:
" . . . ongoing patent infringement
“‘comprises a “series of discrete infringing acts,” each of
which is a distinct harm giving rise to an independent
claim for relief that starts a new limitations period’” . . . Regardless of whether Insulet may still file patent infringement claims for some alleged acts of infringement,
the statute of limitations had expired with respect to
EOFlow’s alleged June 2018 infringement."
As for the merits, CAFC reverses DTSA liability below, finding that the SOL had run:
"Under
the DTSA, the statute of limitations expires “3 years after the date on which the misappropriation with respect to
which the action would relate is discovered or by the exercise of reasonable diligence should have been discovered . . . A variety of cases in California state and federal courts
have interpreted this provision to mean that “[w]hen a
plaintiff brings suit against an individual defendant for
separate misappropriations of related trade secrets, or for
multiple misappropriations of a single secret, the date of
accrual is the date of the initial misappropriation” . . . we must determine
whether, under the access-plus-similarity standard and
Merck discovery standard, Insulet knew or should have
known of facts sufficient to plead access and similarity as
to one of the asserted trade secrets before the critical date . . . By March 15, 2019, which was more than three years
before Insulet filed its original complaint on August 3,
2023, internal Insulet emails showed that Insulet knew
Mr. DiIanni worked with EOFlow on the EOPatch 2 . . . The undisputed facts thus demonstrate Insulet, by March 2019, had
sufficient knowledge to allege that EOFlow hired a former
employee to work on the EOPatch 2 who had knowledge of
and access to Insulet’s trade secrets, which satisfies the access prong as a matter of law . . . The statute of limitations
begins to run with respect to all trade secrets disclosed during substantially the same time to that defendant by the
same person for the same purpose . . . The district court here should
have granted JMOL because the statute of limitations expired before Insulet filed its complaint on August 3, 2023
Importantly, in reaching this conclusion, the majority doesn't belabor whether it's applying a discovery or notice-inquiry standard:
"We need not decide whether EOFlow’s proposed inquiry-notice standard or Insulet’s proposed Merck standard applies. We conclude that even under the more
demanding Merck standard, the statute of limitations expired before Insulet filed its complaint because the undisputed evidence shows that Insulet knew or should have
known before the critical date the facts it needed to sufficiently plead a trade secret misappropriation claim against
EOFlow."
Judge Prost dissents.
"[T]he majority overturns the jury’s verdict based on legal theories that
EOFlow neither presses nor develops. The majority errs in
four main ways: (1) it conflates its application of the discovery rule with the inquiry-notice standard, (2) it adopts
a framework not supported by the case law, (3) it encourages plaintiffs to race to the courthouse with undeveloped
claims based on mere suspicion, and (4) it improperly substitutes our own fact findings for those of the jury."
Basically, Judge Prost reads the DTSA as imposing a discovery standard ("[I]t is clear from the plain text of 18 U.S.C. § 1836(d) that the discovery rule applies, not the inquiry-notice standard") and disagrees with the majority's application of the access-plus-similarity framework:
"I agree with the majority that the access-plus-similarity framework helps determine when a reasonably diligent
plaintiff should have discovered the misappropriation, but
I do not agree with how the majority defines the access-plus-similarity framework and applies it to the facts in this
case. "
Judge Prost is especially concerned that the Majority's analysis relies upon the complaint at this stage, rather than the results of the jury trial, for its analysis.
"[R]ather than draw inferences from the complaint
that are unfavorable to Insulet, I would view the facts developed at trial in the light most favorable to Insulet—the
prevailing party—as is required by our standard of review."
(emphasis in original)
Some colorful comments:
"The majority also holds that Insulet could have discovered the misappropriation if only it had pored over a predominantly Korean-language, 500-page prospectus filed
with Korean financial regulators in July 2020—mere
weeks before the critical date of August 3, 2020 . . . The standard is reasonable diligence, not
maximum feasible diligence . . . The analysis the majority seeks
from the dissent was for the jury to conduct, not this court."
Ouch.
So a contentious issue to remain mindful of.
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- CAFC affirms JMOL overturning a jury infringement verdict, basically finding the trial evidence dispositive of noninfringemnet:
"The trial evidence established that the AutoHop code
runs in the background even when a viewer has not enabled the AutoHop feature, but that AutoHop only skips
commercials if (1) a user has enabled it prior to starting an
episode and (2) the episode is playing, not in fast-forward
or rewind. These two conditions (AutoHop on and episode
playing) are encoded in separate variables within the AutoHop source code. When AutoHop encounters a segment
bookmark, it checks whether both conditions are satisfied.
If the user has enabled commercial skipping and the device
is not in rewind or fast-forward, AutoHop skips the commercial; otherwise, it lets the commercial play.
That evidence permitted only one conclusion: AutoHop
did not provide for the direct disablement of navigation objects."
Similarly, the evidence and record pushed against proferred DOE arguments:
Nor is it possible to set aside that distinction under the doctrine of equivalents . . . the
trial record does not contain any other “particularized testimony and linking argument as to the insubstantiality of
the differences between” AutoHop’s announcement files
and the structure described by the ’799 Patent . . . Moreover, ClearPlay’s theory would erase the claims’ meaningful structural and functional distinction between a “single-object” approach and one that shares elements across multiple objects, even though the ’799 Patent treats that
distinction as one “in kind,” not degree."
Ergo, JMOL affirmed.
-
- CAFC precedentially remands for the DCT to consider two trade secrets damages models the DCT dismissed (i.e., unjust enrichment and the jury award based on contract damages). Indeed, "the
plain language of both the DTSA and the MUTSA allow for
unjust enrichment caused by the misappropriation of the
trade secret that is not accounted for when calculating
damages for actual loss" so it's unclear from my superficial reading why the DCT thought it appropriate to set it aside (furthermore, the Michigan code says: "Damages can include both
the actual loss caused by misappropriation and the unjust
enrichment caused by misappropriation that is not taken
into account in computing actual loss.").
"We disagree with the district court’s reading of Sixth
Circuit precedent. Though the Sixth Circuit did uphold
damages awards that were calculated using royalties-based damages models in Vitro Corp. and Mid-Michigan, it
did not preclude the plaintiff from seeking unjust enrichment damages altogether . . . The district court’s preclusion of unjust enrichment
damages impacted Versata’s ability to seek damages
throughout this case, including at trial and during posttrial proceedings. Accordingly, we partially vacate the district court’s JMOL zeroing out the jury’s damages award
and remand for a new trial on damages for trade secret
misappropriation."
CAFC likewise reverses the DCT's finding of lack of evidence for the jury contract damages award:
"We therefore conclude
that the district court erred when it determined that Versata did not present any evidence that would allow the jury
to calculate damages with reasonable certainty. Versata’s
and Ford’s expert testimony, the submission of the MSSA
and the 2011 addendum, and the jury instructions given by
Versata’s counsel during closing arguments all amount to
sufficient evidence that provided the jury with a discernible path to properly calculate damages. Accordingly, we reverse the district court’s reduction of breach of contract
damages and reinstate the jury award of $82,260,000 to
Versata."
Finally, CAFC affirms the denial of JMOL ("[W]e conclude that Versata presented sufficient evidence to support its claim for trade secret misappropriation").
-
- A couple rather vanilla obviousness and claim construction opinions today, but this one provides a (very brief, but still helpful) true positive regarding motivation to combine analysis:
"[W]e find no clear error in the district court’s
analysis of the skilled artisan’s motivation to modify the
reduction step of Kondo specifically. As the district court noted, both experts agreed that many of the steps of Kondo
would have been considered for modification, including the
reduction step . . . And
Dr. Dichtel presented significant testimony about why a
skilled artisan would have sought to modify Kondo’s reduction step, including cost savings, improvement of the reaction’s safety profile, post-processing simplification, and
knowledge that the hydrogenating agent was already being
used in molar excess . . .
This evidence, tethered to the chemical realities of the reaction, is a far cry from the conclusory expert testimony our
case law rejects . . . We therefore decline to find clear error in the district court’s choice to credit
this testimony."
So, some things to look for when constructing your own non-conclusory argument.
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- In another patent standing case, this one precedential, CAFC reverses and remands finding that "Plaintiff retained an exclusionary right sufficient to
satisfy the “irreducible constitutional minimum of standing.”"
Basically, Plaintiff granted a worldwide, exclusive license to MWV, but with a bunch of conditions and joint enforcement requirements. While those restrictions likely gutted "all substantial rights" to sue under 281, CAFC is here making the point that Article III standing is a distinct inquiry, for which a single exclusionary right suffices.
Why care? Well . . .
"The distinction
. . . matters: constitutional standing “is a jurisdictional requirement” that is “incurable if absent at the initiation of suit,” whereas a statutory standing defect is
“curable by joinder” . . . Accordingly, a plaintiff may have constitutional standing without satisfying the additional statutory requirement of possessing “all substantial rights” . . . In attempting to reconcile our precedents, some district courts
have drawn a bright line between our cases addressing constitutional standing and those addressing statutory standing, concluding that cases addressing one side of that line
have little, if any, relevance to cases on the other side . . . although the two standing inquiries are distinct, the
same facts bearing on whether a patent owner has granted
“all substantial rights” to a licensee to enable the licensee
to have statutory standing may also bear on whether the
owner retained “an exclusionary right” sufficient for constitutional standing."
And so, now focusing on Article III on these facts . . .
"In this case, Plaintiff retains a sublicensing veto that
(while it must be reasonably exercised) prevents Ingevity from granting sublicenses absent Plaintiff’s consent or free
of Plaintiff’s royalty interest . . . That consent right over sublicensing helps preserve Plaintiff’s exclusionary interest because it prevents the licensee from
unilaterally authorizing an accused infringer’s practice of
the patents without Plaintiff’s approval and royalty interests. Moreover, “infringement would amount to an invasion of [Plaintiff’s] legally protected interest” in the patents
because it deprives it of royalties to which it is entitled as
a patent owner . . . Plaintiff’s
right to sue, right to veto sublicenses, and royalty interests
confirm that Plaintiff retains an exclusionary right, establishing that Plaintiff retains a concrete stake in excluding
unauthorized practice of the patents and a mechanism to
enforce that interest . . . On these facts, Plaintiff retained an exclusionary right
sufficient for Article III standing, namely the non-illusory
right to sue that their licensee, Ingevity, could not nullify
through unilateral, royalty-free sublicensing." (emphasis added)
(License drafters take note!).
In any event, reversed and remanded so that the analysis may continue.
James Skelley is a solo practitioner based in Mountain View, California since 2015, focusing primarily upon technology transactions and intellectual property procurement. James' practice also serves as an "incubator" for new legal service technologies / methodologies and a "living example" of their application. To this end, James regularly partners with larger law firms and with his clients so as to improve the practice of intellectual property law.
- Utility / Design / PCT Patent Prosecution
- Open Source Diligence
- Technology Transactions (typically as a team)
- Litigation / Inter Partes Review Support (typically as a team)
- James tends NOT to handle low-volume trademark work (though referrals are available)
- USPTO - #59458 - 10/16/2006
- California - #257829 - 12/01/2008
- District Columbia - #1014986 - 08/05/2013
- James is available by email, 8x8 hangout, and in-person meetups in the Valley.
- Email is typically the best way to reach James.
- Machine Learning / Robotics
- Cryptograpy / Cryptocurrency / Smart Contracts
- Medical Device
- Computational Biology (primarily modeling and proteomics)
- Signal Processing (primarily wireless and compression)
- Quantum Physics (primarily semiconductor) / Electromagnetics (antennae, waveguides, etc.)
- Manufacturing / 3D Printing
- James tends NOT to handle pure chemistry applications (though referrals are available), however James HAS handled matters involving computational proteomics, cellular modeling, and diagnostic lab protocols
LawMux Bites are (very) short, one-page summaries of various legal concepts, cases, and technologies. As informal summaries, you certainly shouldn't rely upon them as legal advice / for business use, but they can help orient you if you're new to the subject matter.